China considers same tax rate for domestic, overseas firms (AFP)
AFP - Chinese lawmakers have mulled a draft law that would impose a 25 percent income tax on both domestic and foreign firms, eliminating the preferential rate for overseas companies, according to state media.
Wall Street drops on economic worry, oil bounce (Reuters)
2008.07.25By Steven C. Johnson 16 minutes ago
NEW YORK (Reuters) - Stocks fell on Thursday as a huge quarterly loss for Ford Motor Co (F.N) and a report showing a steeper-than-expected drop in sales of existing U.S. homes renewed worries about the economy and the outlook for profit growth.
The market ran into headwinds as three Dow components fell following brokerage downgrades -- Boeing Co (BA.N), down more than 6 percent; McDonald's Corp (MCD.N), off a little over 1 percent, and AT&T (T.N), off over 3 percent -- while positive momentum from two days of gains also was broken by a rise in oil prices after two days of declines.
"It all gives one every reason to test what's been a violent and surprising rally over the last few days," said Jim Awad, chairman of W.P. Stewart Asset Management in New York.
"The big question is whether or not it was a fantasy rally," he added. "Smart people will tell you there's enough work to be done in the financial sector and enough after-effects from $4 gasoline to suggest we will go down again."
The Dow Jones industrial average (.DJI) dropped 132.72 points, or 1.14 percent, to 11,499.66. The Standard & Poor's 500 Index (.SPX) declined 14.62 points, or 1.14 percent, to 1,267.57, on track for its biggest drop in two weeks. The Nasdaq Composite Index (.IXIC) fell 21.98 points, or 0.95 percent, to 2,303.87.
Ford Motor Co's (F.N) shares fell 10.1 percent to $5.42 on the New York Stock Exchange after the automaker posted a wider-than-expected quarterly loss on declining sales of pickup trucks and sport utility vehicles in North America.
Shares of U.S. aircraft company and defense contractor Boeing fell 6.6 percent to $62.29, while the stock of AT&T, the largest U.S. telecommunications company, dropped 3.5 percent to $31.89.
Citigroup and Sanford Bernstein cut their price targets on Boeing, while Cowen & Co slashed its rating on the stock.
JPMorgan cut AT&T to "neutral" from "overweight."
McDonald's stock dropped 1.2 percent to $58.94. Deutsche Bank downgraded McDonald's stock a "hold" from a "buy," according to theflyonthewall.com, a financial Web site. On Wednesday, McDonald's reported quarterly profit that beat Wall Street's expectations, but its stock declined after executives said it faced higher costs for beef and chicken.
Dow Chemical (DOW.N) said its profit missed Wall Street's expectations as it grappled with higher energy prices. Dow Chemical's stock fell 1.6 percent to $33.70 on the New York Stock Exchange.
U.S. oil futures rose 16 cents to $124.60 a barrel after a drop of more than 5 percent over the previous two sessions.
On the Nasdaq, Apple Inc (AAPL.O), the maker of the iPod and iPhone, led declines, falling 3.3 percent to $160.74.
Data showing sales of existing U.S. home fell 2.6 percent in June unnerved investors a day after the U.S. House of Representatives passed a rescue package aimed at shoring up a housing market mired in its worst slump since the Great Depression.
Shares of mortgage finance companies Fannie Mae (FNM.N) and Freddie Mac (FRE.N), which would get an emergency lifeline from the government if the bill becomes law, reversed earlier gains and sank. Fannie Mae's stock was down 10.4 percent at $13.44, off an intraday high at $16.07 reached earlier in the session. Freddie Mac's stock was down 9.4 percent at $9.78, off its intraday high of $11.60.
"The housing data certainly didn't help today, and there's no doubt in my mind that we can't declare it 'all clear' on the credit crisis until the housing market improves, or at least stabilizes," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Awad said the rescue package "is a splint on a broken arm, but it still will take time for the arm to heal."
The housing bill must still be passed by the U.S. Senate before it goes to President George W. Bush, who has pledged to sign the bill after abandoning an earlier threat to veto it.
Separate data on Thursday showed a larger-than-expected rise in the number of Americans filing for jobless benefits in the latest week, adding to concerns about a slowing labor market.
(Additional reporting by Ellis Mnyandu; Editing by Jan Paschal)
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